Another Miami hedge fund has been accused of fraud by the Securities and Exchange Commission (SEC). On April 23, 2021 the SEC filed a complaint that charges Andrew Franzone and investment adviser FF Fund Management, LLC “with fraudulently raising and misappropriating tens of millions of dollars from the sale of limited partnership interests in a private fund, FF Fund I LP.”
Andrew Franzone And FF Fund Management Allegedly Defrauded Investors
The SEC’s complaint, filed in Manhattan federal court, alleges that Andrew Franzone, a former race car team owner and the owner and principal of FF Fund Management (FFM), defrauded investors by:
- Misrepresenting the fund’s strategy and investments
- Not eliminating or disclosing conflicts of interest
- Misappropriating assets of the fund
- Falsely claiming that the fund would undergo annual audits
Franzone is alleged to have raised over $38 million from 90 investors, and to have told investors from 2014 through 2019 that the fund would have a liquid portfolio invested in options and preferred stocks.
According to the complaint, Franzone actually channeled fund money to a company he owned and invested the rest of the fund’s money into illiquid private companies and real estate investments. Franzone is alleged to have taken personal loans from the founders of two companies the fund was invested in and to have used fund assets to secure loans that benefitted him personally.
The SEC also claims that Franzone used money he misappropriated from the fund to buy a garage for his race car collection, and that he and FFM did not have the fund audited annually even though they said they would. The fund filed for Chapter 11 Bankruptcy in September, 2019.
Criminal charges have been filed against Andrew Franzone. He and FFM are charged with violating antifraud provisions of federal securities laws. The SEC seeks “disgorgement of ill-gotten gains, civil penalties, and permanent and conduct-based injunctive relief.”
Florida A Hotbed For Hedge Fund Fraud And Ponzi Schemes
Hedge funds are complex investments that frequently use sophisticated investment strategies that are difficult to understand. Hedge funds also operate with minimal transparency, making it challenging for prospective investors to evaluate.
Florida has been a location for many hedge fund fraudsters and Ponzi schemes. Silver Law Group has extensive experience representing victims of this type of fraud. The firm currently represents investors in another alleged fraudulent hedge fund in the Miami area, which was run by David Coggins at his company, Coral Gables Asset Management.
Florida Ponzi Scheme Attorneys-Securities & Investment Fraud?
If you invested in Franzone’s hedge fund, contact Silver Law Group for a confidential consultation. Silver Law Group represents victims of securities and investment fraud cases nationwide to help recover losses due to stockbroker misconduct, hedge fund fraud, and other investment-related wrongdoing. We work on a contingency fee basis, meaning you won’t owe us anything unless we are successful. Call us toll free at (800) 975-4345 or email firstname.lastname@example.org. Our Ponzi scheme attorneys are licensed in Florida and New York and represent investors nationwide.